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Union Pacific (UNP) Q2 Earnings Miss Estimates, Fall Y/Y
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Union Pacific Corporation’s (UNP - Free Report) second-quarter 2023 earnings of $2.57 per share missed the Zacks Consensus Estimate of $2.75. Moreover, the bottom line plunged 12.3% on a year-over-year basis.
Operating revenues of $5,963 million missed the Zacks Consensus Estimate of $6,121.3 million. The top line tumbled 4.9% on a year-over-year basis due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix.
Freight revenues, accounted for 93.4% of the top line, decreased 5% to $5,569 million. The metric fell short of our projection of $5,719.5 million. Other revenues declined 8% to $394 million in the second quarter and lagged our expectation of $412.9 million. Business volumes, measured by total revenue carloads, were down 2%.
Operating income in the second quarter declined 12% year over year to $2.2 billion.
Union Pacific Corporation Price, Consensus and EPS Surprise
Total operating expenses of $3,759 million remained almost flat year over year. Fuel expenses plunged 29%. Expenses on purchased services and materials increased 5%. Compensation and benefits climbed 16% year over year. The other cost items grew 6% year over year.
The operating ratio (operating expenses as a percentage of revenues) improved by 280 basis points to 63%. Falling fuel prices in the quarter, however, positively impacted the operating ratio by 190 basis points.
Segmental Performance
Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,757 million, down 3% year over year. The actual percentage decline was lesser than our expectation of a 6.4% year-over-year fall. Segmental revenue carloads declined 1% year over year.
Industrial freight revenues totaled $2,086 million, remained almost unchanged year over year. We estimated a 3.9% decline from second-quarter 2022 actuals. Segmental revenue carloads rose 1% year over year.
Freight revenues in the Premium division were $1,726 million, down 11% year over year. Segmental revenue carloads fell 4% year over year.
Liquidity & Buyback
Union Pacific exited second-quarter 2023 with cash and cash equivalents of $830 million compared with $973 million at the end of 2022. Debt (due after a year) decreased to $31,557 million at the second-quarter end from $31,648 million at 2022 end.
In the reported quarter, Union Pacific repurchased 600,000 shares at an aggregate cost of $120 million.
Capital expenditure is still projected to be $3.6 billion.
Management also expects to maintain a dividend of $1.30 per quarter. UNP has no plans to make further share buybacks this year.
Q2 Performance of Some Other Transportation Companies
J.B. Hunt Transport Services’ (JBHT - Free Report) second-quarter 2023 earnings of $1.81 per share missed the Zacks Consensus Estimate of $1.97 and declined 25.2% year over year. Total operating revenues of $3,132.6 million also missed the Zacks Consensus Estimate of $3,347.5 million. The top line fell 18.4% year over year.
The downfall was due to a decline in revenue per load of 24% in Integrated Capacity Solutions, 13% in Intermodal and 21% in Truckload. A 4% decrease in productivity in Dedicated Capacity Solutions added to the woes. Changes in customer rate, freight mix and lower fuel surcharge revenues resulted in this downtick.
Delta Air Lines’ (DAL - Free Report) second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL reported earnings of $1.44 a year ago.
Revenues of $15,578 million outshined the Zacks Consensus Estimate of $14,991.6 million. Total revenues increased 12.69% on a year-over-year basis driven by higher air-travel demand. The adjusted operating margin was 17.1% compared with 11.7% in the prior-year period.
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Union Pacific (UNP) Q2 Earnings Miss Estimates, Fall Y/Y
Union Pacific Corporation’s (UNP - Free Report) second-quarter 2023 earnings of $2.57 per share missed the Zacks Consensus Estimate of $2.75. Moreover, the bottom line plunged 12.3% on a year-over-year basis.
Operating revenues of $5,963 million missed the Zacks Consensus Estimate of $6,121.3 million. The top line tumbled 4.9% on a year-over-year basis due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix.
Freight revenues, accounted for 93.4% of the top line, decreased 5% to $5,569 million. The metric fell short of our projection of $5,719.5 million. Other revenues declined 8% to $394 million in the second quarter and lagged our expectation of $412.9 million. Business volumes, measured by total revenue carloads, were down 2%.
Operating income in the second quarter declined 12% year over year to $2.2 billion.
Union Pacific Corporation Price, Consensus and EPS Surprise
Union Pacific Corporation price-consensus-eps-surprise-chart | Union Pacific Corporation Quote
Total operating expenses of $3,759 million remained almost flat year over year. Fuel expenses plunged 29%. Expenses on purchased services and materials increased 5%. Compensation and benefits climbed 16% year over year. The other cost items grew 6% year over year.
The operating ratio (operating expenses as a percentage of revenues) improved by 280 basis points to 63%. Falling fuel prices in the quarter, however, positively impacted the operating ratio by 190 basis points.
Segmental Performance
Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,757 million, down 3% year over year. The actual percentage decline was lesser than our expectation of a 6.4% year-over-year fall. Segmental revenue carloads declined 1% year over year.
Industrial freight revenues totaled $2,086 million, remained almost unchanged year over year. We estimated a 3.9% decline from second-quarter 2022 actuals. Segmental revenue carloads rose 1% year over year.
Freight revenues in the Premium division were $1,726 million, down 11% year over year. Segmental revenue carloads fell 4% year over year.
Liquidity & Buyback
Union Pacific exited second-quarter 2023 with cash and cash equivalents of $830 million compared with $973 million at the end of 2022. Debt (due after a year) decreased to $31,557 million at the second-quarter end from $31,648 million at 2022 end.
In the reported quarter, Union Pacific repurchased 600,000 shares at an aggregate cost of $120 million.
Currently, Union Pacific carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2023 Outlook
Capital expenditure is still projected to be $3.6 billion.
Management also expects to maintain a dividend of $1.30 per quarter. UNP has no plans to make further share buybacks this year.
Q2 Performance of Some Other Transportation Companies
J.B. Hunt Transport Services’ (JBHT - Free Report) second-quarter 2023 earnings of $1.81 per share missed the Zacks Consensus Estimate of $1.97 and declined 25.2% year over year. Total operating revenues of $3,132.6 million also missed the Zacks Consensus Estimate of $3,347.5 million. The top line fell 18.4% year over year.
The downfall was due to a decline in revenue per load of 24% in Integrated Capacity Solutions, 13% in Intermodal and 21% in Truckload. A 4% decrease in productivity in Dedicated Capacity Solutions added to the woes. Changes in customer rate, freight mix and lower fuel surcharge revenues resulted in this downtick.
Delta Air Lines’ (DAL - Free Report) second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL reported earnings of $1.44 a year ago.
Revenues of $15,578 million outshined the Zacks Consensus Estimate of $14,991.6 million. Total revenues increased 12.69% on a year-over-year basis driven by higher air-travel demand. The adjusted operating margin was 17.1% compared with 11.7% in the prior-year period.